Correlation Between Microsoft and Roo Hsing
Can any of the company-specific risk be diversified away by investing in both Microsoft and Roo Hsing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Roo Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Roo Hsing Co, you can compare the effects of market volatilities on Microsoft and Roo Hsing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Roo Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Roo Hsing.
Diversification Opportunities for Microsoft and Roo Hsing
Good diversification
The 3 months correlation between Microsoft and Roo is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Roo Hsing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roo Hsing and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Roo Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roo Hsing has no effect on the direction of Microsoft i.e., Microsoft and Roo Hsing go up and down completely randomly.
Pair Corralation between Microsoft and Roo Hsing
Given the investment horizon of 90 days Microsoft is expected to under-perform the Roo Hsing. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.06 times less risky than Roo Hsing. The stock trades about -0.02 of its potential returns per unit of risk. The Roo Hsing Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 312.00 in Roo Hsing Co on August 31, 2024 and sell it today you would earn a total of 2.00 from holding Roo Hsing Co or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Roo Hsing Co
Performance |
| Timeline |
| Microsoft |
| Roo Hsing |
Microsoft and Roo Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Roo Hsing
The main advantage of trading using opposite Microsoft and Roo Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Roo Hsing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Roo Hsing will offset losses from the drop in Roo Hsing's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Roo Hsing vs. Chaintech Technology Corp | Roo Hsing vs. AVerMedia Technologies | Roo Hsing vs. Avision | Roo Hsing vs. Clevo Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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